Women CEOs more likely to be fired than men

May 27, 2014
<p>Strategy&amp; study concludes that a third of departing female chief executives are forced out</p>

Despite recent strides towards promoting equality between the sexes in the boardroom, researchers at Strategy& report that female CEOs are still far more likely to be fired than their male counterparts.

The report, which forms part of the company’s 2013 Chief Executive Study, finds that women are forced out of CEO positions in more than a third of cases, while just under a quarter of men in the same role suffer the same end.

It goes on to examine CEO turnover in both sexes over the past decade at the largest 2,500 publically listed companies and concludes that, though women still only represent 3 percent of new CEOs, they are often made to leave their posts sooner than men.

At the same time, Strategy& say that based on current trends – including the company’s data, improving education levels among women and changing social norms – a third of all new CEOs will be women by 2040.

In eight out the last 10 years, the proportion of incoming CEOs who were female has exceeded the proportion of outgoing executives – a fact, says Ken Favaro, one of the report’s co-authors, that shows ‘women CEOs are becoming more prevalent among the world’s largest 2,500 public companies.’

‘We tend to like those that are most like us,’ Favaro continues. ‘Sadly, company boards are still mostly men, and they're more inclined to pull the trigger on women if things aren't working out. Women are treated more harshly by men because there are more men in the boardroom.’ As long as this lasts, he adds, ‘women will be at a disadvantage.’

The Strategy& report came out shortly after Glencore announced it was ‘an important priority of the board’ to appoint a new female director before the end of the year. The mining group is currently the only company in the FTSE 100 with an all-male directorship.

According to the study, companies in the US and Canada took on the highest percentage of women CEOs over the last 10 years – both 3.2 percent – while Japan took on the smallest proportion of only 0.8 percent. Industry-wise, 3.1 percent of CEOs in information technology are female, though only 0.8 percent of boards in the materials sector are headed by women.

The report also looked more generally into the situations that lead to CEOs being dismissed. Low shareholder returns, understandably, appear to fuel many: 32 percent of CEOs in the lowest quartile of financial reporters were dismissed. Companies also more frequently hire outsiders to replace poorly performing CEOs.

‘When a CEO is forced out, appointing a new CEO is a time-sensitive decision’, explains Per-Ola Karlsson, another of the report’s co-authors. ‘Companies that do not have effective succession practices in place more often have to rely on outsiders to fill the position quickly. These companies may also be looking for new ideas.’

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